Owning a small business is part of many people’s “American Dream.” Whether it’s owning a restaurant, cleaning company, pet sitting service, retail store, or thousands of other options in providing goods and services, people have dreams of making it big and being their own boss.

Millions of people in America have started small businesses only to discover that there are many more costs associated with it than they ever dreamed of. If just one of these hidden costs reared its head, it wouldn’t be such a big problem for the average small business owner. But when all of them come together — including credit card processing fees — it can all become overwhelming for a small business owner who isn’t ready for them.

Today we’re going to go beyond our normal discussion about our credit card services and discuss some of the hidden costs that a small business might face, ones that could cause it to fail if not addressed early on. After that, we’ll discuss how our merchant account services can help you avoid some of these monetary problems.


When most people think “shrinkage,” the first thing that comes to mind is employee theft and shoplifting. Shrinkage also covers vendor fraud, such as when someone you’re working with finds a way to not pay you properly or delivers the wrong goods. All of these are intentional forms of shrinkage.

But there are also unintentional forms of shrinkage. Paperwork errors, (often caused by small business owners being too rushed), customer damages that you don’t charge for, or cashier errors that benefit the customer all are forms of shrinkage. Some definitions of business shrinkage also include perishable food that is lost, either because it doesn’t sell or because of a power outage that causes food in refrigerators and freezers to spoil.

It’s incredibly important for small business owners to keep an eye on shrinkage. While larger companies have an easier time absorbing the costs associated with these problems, small businesses can live or die by the degree of shrinkage that they experience.

Permits and Fees

When you started up your LLC, you were probably surprised at how cheap it was to register with the state. For just $300 (as of the time of this writing), your business is up and running in Texas! This might have led you to a false sense of how inexpensive it is to get a business going.

Unfortunately, there are many other fees that can pop up, whether at the state or local level. If you want to open a liquor store, the permits that have to be filed and the fees that have to be paid are going to be considerably more than for a lawn care company.


Even if your permits don’t cost you much, you’ll still have taxes to deal with at every level of government. If you’ve never owned a small business before, it’s important to realize that self-employment tax is something you should plan for. On top of that, the property taxes will be a considerable expense if you purchased the building your business is in.

There’s also the little point of keeping track of taxes that are considerably more complex than you might be used to. Hiring a professional to take care of business taxes is going to cost more than having someone do your personal taxes.

Legal Fees

If the government doesn’t get you, the lawyers will!

Legal fees are a surprise to many people who are interested in starting up a small business, especially for those who haven’t had to deal with a lawyer beyond getting a simple will done. Sometimes a lawyer is needed in order to hammer out the details of who owns the business, or to delineate the boundaries of investors. The most trying time that small businesses need a lawyer is to help them with lawsuits brought about by customers, such as “slip and fall” cases. Small businesses are more likely to attract frivolous lawsuits because small business don’t have the legal resources to fight them in court.

If someone sues and you settle, that means your insurance costs will most likely go up as well. That leads us to another hidden fee, namely…


Does it feel like every aspect of your personal life has some sort of insurance tied to it? There’s health insurance, life insurance, home or apartment insurance, car insurance, personal articles insurance, long-term care insurance, and many more types that the average insurance agent will try to convince you you need.

It only gets worse when you start up a small business. If you purchase a building, there will be insurance to protect it. You’ll need liability insurance to protect you from an employee injury, as well as from customer injury. Then there’s errors and omissions insurance, workers’ comp insurance, and cyber insurance. (For this last one, going with a reliable POS system that has a proven track record of cybersecurity might be able to reduce your premiums for cybersecurity insurance.) On top of that, if you take money out for a loan you might have to pay higher rates based on your credit score, which is itself a type of insurance you’re paying to your lender.

There are many factors that determine how much you’ll be paying for insurance, including the number of employees, the area your business operates from, the industry (restaurant vs. retail vs. home-based), revenue, and other risk factors to speak with an insurance agent about.

Credit Card Processing Fees

When most small business owners start up, they are often filled with such excitement that they will mentally “wave away” some fees that they really should be concerned about. The idea of losing 5% of a sale to credit card fees at first seems like something that can be ignored, when in fact that seemingly small amount can steal thousands of dollars a year…money that could instead be reinvested in the business.

Most businesses just accept those fees as being inevitable, when in fact credit card processing for small businesses can be much more reasonable. When working with Journey Business Solutions and the cash discount we offer, you no longer have to be the one to absorb the costs associated with high credit card processing fees.

Are You Ready To Start Your Small Business?

Starting a business isn’t something to be taken lightly, so we hope the points above have given you something to think about. We certainly don’t want to dissuade you from starting your business, but having information about what to expect can help you plan for the unexpected expenses. Stop back by next time for some more surprising costs, and if you’d like to avoid those associated with credit card processing for small businesses, watch this video!